Washington Report (July 2025)

Trade

On July 7, President Trump signed an Executive Order executive order extending the deadline for forging trade deals with competing countries from July 9 to August 1. The action effectively extends the baseline additional 10 percent “reciprocal” tariff on all countries (except Mexico, Canada and China) until August. This pause is an extension of the original pause in the “reciprocal” tariffs that were announced on April 2. The pause has been in place since April 9.

The President sent letters to 14 countries that have not yet come to the table to negotiate a new trade agreement with the U.S. You can see the list of countries contacted and the new tariff rates here.

Although the White House has signaled that trade agreements are being forged, no new trade deals have been announced. The White House has hinted that some deals may be revealed in the coming days.

On July 12th, President Trump announced that letters had been issued to both the European Union and Mexico, notifying them of the United States' intent to impose 30% import tariffs beginning August 1st. The President also indicated that negotiations remain possible, suggesting the door is still open for alternative trade agreements. In response, the European Union has stated it will postpone any retaliatory action until at least August 6th.

Hearing on Forest Service Budget

The Senate Energy and Natural Resources Committee held a hearing last week on the U.S. Forest Service’s Fiscal Year 2026 budget. The proposed budget reduces funding for Forest Service functions and delegates wildfire management to the Interior Department. Forest Service Chief Tom Shultz was the sole witness.

During questioning, Senator Steve Daines (R-MT) asked Chief Shultz if the Forest Service would prioritize implementation of language in the recently enacted budget reconciliation legislation to increase timber production on federal lands. Chief Shultz responded that the USFS would take steps necessary to ensure that an increase of 250 million board feet of timber is produced from federal lands year over year going forward. 

Farm Bill

House Agriculture Committee Chairman Glenn Thompson (R-PA) appears to have moved off his goal of marking up Farm Bill reauthorization legislation before the August recess. He had signaled to committee staff in late June that he wanted to proceed on a Farm Bill markup in late July. He is now signaling that his committee will try to proceed in mid-September. The WIA team continues to advocate for full funding and authorization of the Wood Innovation and Community Wood grant programs, as well as a robust Forest Inventory and Analysis program and inclusion of Jobs in the Woods Act provisions.

Tax Recap

In early July, the House of Representatives passed H.R. 1, the budget reconciliation bill containing GOP policy priorities, by a vote of 218-14. It was sent to the President, who signed the measure into law on July 4. 

As we have noted during the process, the legislation revives and makes permanent key business tax incentives, including the research and development tax credit which expired in 2022. The 100 percent bonus depreciation benefit which has been phasing out is also made permanent. In addition, the 20 percent deduction for S-Corporations and other pass-through entities was also made permanent. That benefit was slated to expire at the end of 2025.

Other items of interest include—

• Sec. 179 expensing: Increases the maximum amount a taxpayer may expense under Sec. 179 to $2.5 million, reduced by the amount by which the cost of qualifying property exceeds $4 million.
• EBITDA: Restores the more favorable EBITDA standard for calculating interest deductibility. The current standard is EBIT.
• Estate Tax: Permanently increases the estate tax exemption to $15 million beginning in tax year 2026. This amount is indexed for inflation thereafter.
• State and Local Tax (SALT) Deduction: Provides a temporary new SALT deduction cap of $40,000, beginning in 2025. This cap phases out at a rate of 30 percent of adjusted gross income over $500,000, to a minimum cap of $10,000. Starting in 2026, the applicable cap and phase-out thresholds grow by 1 percent each year through 2029. In 2030, the cap reverts permanently to a maximum of $10,000.
• International Provisions: Permanently maintains the section 250 deduction and effective statutory tax rates on global intangible low-taxed income (GILTI) and foreign-derived intangible income (FDII) close to their current levels (they would increase in 2026 under current law) and makes other changes to the taxation of multinational businesses.

In addition to the tax provisions, there is language in the measure addressing federal forest management and timber production. These provisions do the following--

• Requires that the U.S. Forest Service award no fewer than 40 long-term timber contracts to private individuals or public/private entities during fiscal years 2025 through 2034. The intent is to enhance supply predictability for the forest products industry. However, the provision has drawn scrutiny from some stakeholders who caution that it may limit competition by concentrating access among fewer market participants. 
• For each fiscal year from 2026 through 2034, the Forest Service shall annually sell timber from National Forest System lands at a volume at least 250 million board feet greater than the volume sold in the preceding fiscal year. However, the total annual sale may not exceed the allowable sale quantity.

To offset costs associated with H.R. 1, the legislation eliminates the following clean energy credits—

• Sec. 25E previously owned clean vehicle credit (terminated after Sept. 30, 2025)
• Sec. 30D clean vehicle credit (terminated for vehicles acquired after Sept. 30, 2025)
• Sec. 45W qualified commercial clean vehicle credit (terminated after Sept. 30, 2025)
• Sec. 30C alternative fuel vehicle refueling credit (terminated after June 30, 2026)
• Sec. 25C energy-efficient home improvement credit (terminated after Dec. 31, 2025)
• Sec. 25D residential clean energy credit (terminated for expenditures made after Dec. 31, 2025)
• Sec. 179D energy-efficient commercial buildings deduction (terminated for property the construction of which begins after June 30, 2026)
• Sec. 45L new energy-efficient home credit (terminated after June 30, 2026)
• Sec. 45V clean hydrogen production credit (terminated after Jan. 1, 2028)
• Sec. 6426(k) sustainable aviation fuel credit (terminated after Sept. 30, 2025)

Transportation - FMCSA Policy on Driver Language Proficiency Enforcement

As of June 25, 2025, the Federal Motor Carrier Safety Administration (FMCSA) will begin strict enforcement of the longstanding requirement that commercial drivers must be able to read and speak English. This follows an April 2025 Executive Order that rescinds a 2016 interpretation, allowing for more discretion in enforcement.

Key changes include:

• Mandatory roadside English assessments with no interpreters or translation tools allowed.
• Drivers unable to converse or read road signs will be placed out-of-service immediately.
• FMCSA is also reviewing CDL issuance to non-domiciled drivers for compliance.

This shift signals a heightened regulatory emphasis on language competency as a safety requirement.